See when it is worth taking the Auxílio Brasil payroll loan

More than 20 million citizens who receive Auxílio Brasil from the federal government will be able, as of September, to contract payroll-deductible credit linked to the benefit. The income commitment limit is up to 40%: 35% with the payroll loan and 5% with the payroll credit card.

Credit has been criticized for the possibility of taking the most vulnerable population into debt, but there are at least two situations in which the loan can help: to undertake and to pay installments of the home, if there is a high risk of losing the property. For the experts consulted, it is only indicated to exchange a debt for the consigned aid if this is compromising livelihood. There are other ways to try to negotiate with banks and finance companies without needing payroll, which will reduce income for years, say the consultants heard by the report.

Auxílio Brasil is paid to families in extreme poverty (with income of up to R$ 105 per person in the family) and poverty (R$ 105.01 and R$ 210 per person in the family), in the amount of R$ 400 per family member. month. The government will pay R$600 from August to December, a measure approved in the year in which President Jair Bolsonaro (PL) is seeking re-election.

The interest on the Auxílio Brasil consignment will be defined by the institution that is able to offer the credit. For now, none of them have informed how much they will charge, but there are already cases in which the rate reaches 79% per year, according to pre-registration made by beneficiaries.

The government has not yet detailed whether there will be a maximum rate that financial institutions will be able to offer in this type of credit, a rule that is applied today in the payroll of retirees and pensioners of the INSS (National Institute of Social Security). A regulation on credit still needs to come out.

The Ministry of Citizenship reported that “interest rates, payment terms, number of installments and grace period will be defined by the financial institutions registered to carry out the operation”.

Future government regulation may change the rules, but the report found that the intention is to keep the rules open to be defined according to competition between institutions.

Before taking out the credit, you will need to compare the interest on the payroll loan offered by the institution and the rates of other modalities, such as the personal loan.

The second point to be considered is personal and must be linked to the future possibilities of paying the debt, since the aid is not permanent and can be cut.

at the request of Sheetfinancial educator Cíntia Senna, from Dsop, performed loan simulations that compare the installments and debt of the payroll loan with other types of credit, such as overdraft, credit card and CDC (Direct Consumer Credit).

The simulations consider borrowed amounts from R$ 600 to R$ 3,000, to be paid in 24 installments (two years). For payroll, the interest used in the simulation is estimated at 5% per month.

In the case of overdraft, interest is 8%. In this modality, there are two options: without paying monthly installments and paying an amount per month to avoid getting even more indebted. Credit card interest is 9.48% per month and, at CDC, the average interest used in the simulations is 4.29%.

Check the simulations, in BRL

Loan pros and cons

Ricardo Teixeira, coordinator of the MBA in financial management at FGV (Fundação Getulio Vargas), says that, from a financial point of view, the payroll loan is a worthwhile loan because it has lower interest rates. However, from a social point of view, taking into account the vulnerability of Auxílio Brasil beneficiaries, it does not pay off.

“For the person to make the decision [sobre emprestar ou não], my advice is: use Auxílio Brasil without paying interest. This money is being released so that you can survive and, by surviving, you can look for some way to produce income”, he says.

The specialist says that, if he is already in debt, the citizen should try to negotiate the debt in another way, without taking the Auxílio Brasil consignment to try to pay it off.

Educator Cíntia Senna agrees with Teixeira. The beneficiary with debts should try other alternatives before considering taking out a payroll loan that is guaranteed by the benefit he receives.

According to her, you have to think that you will spend a lot of time earning a much lower value. “I would not recommend this type of loan at first, even when we look at the interest rate, because the main aspect of the payroll loan is that it already eats the income at source.”

Public defender Luiz Fernando Baby Miranda, assistant coordinator of the consumer defense center of the Public Defender’s Office of SP, says that there is a concern about fraud involving this payroll, which can further harm vulnerable families.

The Public Defender’s Office is part of a group of institutions that signed a manifesto asking for the postponement of the Auxílio Brasil consignment. “As a rule, interest rates are lower, but a previous issue is the ability to take credit of a person who is in a difficult situation like this. I am worried. How can I expect him to live with 60% of the benefit?”

The manifest must be sent to the Ministry of Citizenship. The group’s intention is to have access to studies that prove the benefits of payroll-deductible loans in Auxílio Brasil. For Miranda, however, the release of microcredit for this public could be more advantageous. “We are not against credit or against banking, but there are other ways of working with this”, she says.

When can the consignment be worth it?

There are three situations in which the payroll for Auxílio Brasil beneficiaries can help, even if it is a debt to be paid over a long period of time.

1 – To undertake

• Experts agree that using the payroll loan to try to start a business is the best destination for the money, but they believe that, first, citizens should think about ensuring their survival before getting into debt.
• For Miranda, from the São Paulo Defender’s Office, a tool that could be aimed at this audience is a microcredit. “We understand that they are very resource intensive,” she says.

2 – Not to lose your own home

• According to Cíntia, from Dsop, the negotiation of the installments of the own house when there is an imminent risk of loss of the asset can be done with payroll, but she indicates trying other alternatives. The specialist says that there is the possibility of asking for a break in financing, for example.
• For her, it is still possible to try to put the property up for sale to pay off the real estate loan, not lose the property and have money to adjust the family’s life. “It is necessary to seek alternatives that have financial education as a basis,” she says.

What do the banks say?

The largest banks in the country are divided on whether or not to offer payroll loans.

In a statement, Itaú said that it “does not offer payroll-deductible loans to Auxílio Brasil beneficiaries, and has no prospect of offering it.”

Santander also stated that it does not offer. Bradesco, on the other hand, reported that, at first, “it will not offer the payroll-deductible line of credit to beneficiaries of Auxílio Brasil”.

Banco do Brasil said it “evaluates technical and business conditions based on regulations defined by the federal government” and Caixa said it will offer the payroll loan. “Caixa informs that the conditions of the Auxílio Brasil consigned credit will be disclosed and offered after the publication of an ordinance from the Ministry of Citizenship, with the complementary rules on the operation”, says a note from the bank.

Banco Pan will offer the credit, but informs that it awaits “effective regulation of the line by the competent authorities”.

Banco Daycoval, which has been operating with payroll-deductible loans for almost 20 years, said that it is considering operating Auxílio Brasil’s payroll-deductible loans “following market rules”. “Banco Daycoval awaits the release of the competent body to see customer demand and structure its operations,” he said in a note.

The Central Bank informed that it will monitor operations “in an aggregated way in the set of other payroll loan operations” and says that it has financial education platforms for the population in general, including the most vulnerable.

Citizenship does not detail participating institutions

The Minister of Citizenship, Ronaldo Bent, said last week that there are 17 institutions approved and able to grant the loan. When contacted, the Ministry of Citizenship did not say which institutions they are.

According to the agency, complementary or temporary benefits are not included in the calculation to define the amount of the loan.

understand the loan

Payroll credit is a benefit that has a direct discount on the payroll, so the risk of default for banks and financial institutions that lend is practically zero, which makes interest rates lower than other modalities. In the case of the INSS payroll, there is control of interest and number of installments.